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Larry Kudlow Pours Cold Water On Market, Says No China Trade Plan Is Being Drafted

So much for that.

Well, so much for that.

Everybody was pretty excited about overnight reports that Donald Trump instructed his cabinet to draw up plans for a trade truce with China following what the President described as a “very long, very good” phone call with Xi Jinping.

So excited were markets, that the Hang Seng and the Kospi surged the most in seven years, spearheading a ridiculous rally across Asia which then spilled over into the European session.

HangSeng

We were hardly the only folks to suggest that market participants might want to curb their enthusiasm. After all, this was all predicated on a phone call involving Donald Trump as described on Twitter by that same Donald Trump and you know how that goes, right?

Additionally, the last time the U.S. struck a truce with China on trade, Trump was quick to renege at the first sign of a backlash from the protectionist contingent.

It thus comes as no surprise that Larry Kudlow told CNBC that contrary to reports, the President did not in fact tell his cabinet to draw up a truce to present to Xi at the G-20. Specifically, Kudlow said this:

There’s no massive movement to deal with China. We have already put out asks to China with respect to trade. We’re doing a normal, routine run-through of things that we’ve already put together and normal preparation. We’re not on the cusp of a deal.

That comes after a series of tweets from Eamon Javers, who essentially said the same thing. “Three senior administration officials [are] now telling me there is no indication of an imminent trade deal with China”, Javers tweeted on Friday, adding that while “options are always being discussed behind the scenes, [there is] no significant progress.”

Needless to say, none of that is what the market wanted to hear on Friday, and the reaction was predictable, with stocks diving to the lows of the day.

When CNBC asked Kudlow specifically whether Trump had asked anyone to craft a draft deal, Larry flatly said this:

No.

 

 

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3 comments on “Larry Kudlow Pours Cold Water On Market, Says No China Trade Plan Is Being Drafted

  1. Now that our collective rose colored glasses have been thoroughly ripped off and stomped upon yet again, and knowing the Big One is coming very soon in 2019, how is the market supposed to rally into the end of this year?

    • I suppose this is the part where “If Santa Claus should fail to call, bears will come to Broad and Wall” comes true.

  2. I was surprised so many people believed Trump was telling the truth? When was Trump known for being someone you can take at his word…?

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